August 5, 1976
Page 25915
SECTION 2601
Mr. LONG. Mr. President, I ask unanimous consent that the Senator from Maine be permitted to make a motion to strike or to indefinitely postpone, whichever he proposes to do, the item involving the credit for tuition for people going to college so that we can have a roll call vote on that.
I hope we would settle for one roll call vote rather than two. There is no reason for proceeding on the motion to strike first and then on the amendment itself. If the motion to strike fails, I think it is reasonabe to think that all those voting for it would be in favor of the amendment.
So, Mr. President, on the time yielded to me on the bill I yield 2 minutes to the Senator from Maine.
I first ask unanimous consent that it might be in order to consider separately the section dealing with the college tuition credit.
The PRESIDING OFFICER. Would the Senator state the number of the section?
Mr. LONG. It is 2601.
The PRESIDING OFFICER Is there objection? The Chair hears none, and it is so ordered.
Mr. LONG. Mr. President, I ask unanimous consent that it might be in order for the Senator from Maine to make a motion to strike or indefinitely postpone, whichever he prefers, and that the time be limited — I yield the Senator 2 minutes for that purpose.
The PRESIDING OFFICER. Is there objection?
Mr. PACKWOOD. Reserving the right to object, what was the request?
Mr. LONG. That the Senator from Maine have an opportunity to make his motion. He wants to
move to strike or postpone that section.
Mr. PACKWOOD. The whole section?
Mr. LONG. Just the part dealing with tuition credit, 2601.
The PRESIDING OFFICER Is there objection? The Chair hears none, and it is so ordered.
Mr. MUSKIE. Mr. President, I do move to postpone indefinitely further consideration of section 2601, which is the college tuition credit.
Mr. President, I am not sure the subject can be covered in 2 minutes, but let me try.
The Senators, I hope, will be interested in the present budgetary impact of what we have done on this bill to date. When this bill came to the Senate floor the committee had provided $980 million, call it $1 billion, of the $2 billion revenue gain from tax expenditures that had been projected by the budget resolution.
As of this moment we have lost all but $150 million of that $1 billion. Now, those are our figures. The Joint Committee on Internal Revenue Taxation may have a better figure than that, but that is the figure I am operating on.
Now, with respect to what we have done already outside of the bill that was reported to the Senate, as I listened to the vote we have just taken on a prepaid legal services program, which we are told would cost $5 million the first year, $33 million in the fifth year, I would like to remind the Senate that the prepaid medical services program costs us several hundred million dollars in revenue at the present time, and there is no way of being sure what the outyear costs of that program may be.
I am tempted to think that Senators who would like to spend more money for education or health or other worthwhile purposes ought to move their programs from the budget to the Internal Revenue Code. I find Senators this afternoon voting to spend money through the Internal Revenue Code for social purposes that they would never support if the same amount of money were involved in additions to the budget.
A perfect demonstration of that is these three items:
First, estate and gift tax changes incorporated in the bill. The cumulative 5-year impact is $6.1 billion. That is a revenue loss that has no impact in fiscal 1977, but the budget process is still going to be around 5 years from now, and the Congress is still going to have to fund the Federal spending as well as tax expenditures.
And here is an outyear cost that is easy to buy because it does not have an effect on the 1977 budget, 5-year cumulative impact of $6.1billion.
There is a sliding scale capital gains $2.4 billion, cumulative 5-year impact.
College tuition credit, $3.2 billion.
Those three put together, almost $12 billion.
If I, or any other Senator, were to propose that kind of increase in budgetary spending for these kinds of purposes, I suspect I would be laughed off the floor of the Senate.
The PRESIDING OFFICER (Mr. TAFT). The Senator's time has expired.
Mr. MUSKIE. May I have 2 more minutes?
Mr. LONG. One more?
Mr. MUSKIE. When it is done under the aegis of the Internal Revenue Code, apparently, all restraint vanishes.
I simply cannot, as chairman of the Budget Committee, just silently let this process continue as it has according to the figures I have given.
I would like to make some arguments on the merits of the Roth proposal, which is what I have asked we vote on, but I do not have the time.
So I will limit myself to a brief statement of the budgetary impact.
I am interested to know whether the Senate means what it said in the Budget Reform Act. Are we going to exercise restraint under the Internal Revenue Code as well as the budget, or is it just a one track proposition?
Are we going to restrain spending and open the door through the Internal Revenue Code?
That is the question. That is why I have chosen this one of those three proposals to test the question.
I understand the appeal of this amendment and, incidentally, the Buckley amendment which was broader.
The PRESIDING OFFICER. The Senator's additional minute has expired.
Mr. MUSKIE. Would have cost $5.8.
Mr. KENNEDY. Mr. President, I ask unanimous consent for another 10 minutes.
Mr. LONG. I object.
Mr. KENNEDY. I say, we have worked out consent agreements and we will keep that in mind for the rest of the afternoon when we are talking about some other matters.
Mr. LONG. I will yield an additional minute to the Senator.
Mr. MUSKIE. How much?
Mr. KENNEDY. Ten more, Mr. President.
Mr. LONG. I object.
Mr. KENNEDY addressed the Chair.
Mr. MUSKIE. Mr. President, may I suggest to the Senator, if there is a discussion on the merits now—
Mr. LONG. Does the Senator want 2 minutes?
Mr. MUSKIE. I do not want more now,but I would like to put this proposition.
If there is a discussion on the merits following my proposal here, then I would appreciate the courtesy of being able to reply at that time.
But at this point, I have said enough, I think, to sustain the motion to indefinitely postpone.
I yield the floor.
Mr. LONG. I suggest if the Senator wants 5 minutes, he take 5 minutes. I want to get to a vote. He asked for 2, I will yield 5 more.
Mr. MUSKIE. I appreciate the Senator's courtesy. He gave me what I asked for.
All I am doing is suggesting that if there is an argument on the merits, I would like to have a little time to answer that. But if there is not, then I intend to vote on it.
Mr. LONG. The Senator from Delaware is entitled to have 1 minute. Perhaps he is entitled to 2, under the circumstances, but I will yield to the Senator from Delaware.
Mr. ROTH. Mr. President, I would liketo emphasize what the senior Senator from Maine (Mr. MUSKIE) admitted, and that is that the Finance Committee amendment which I have sponsored will have no effect on revenue in fiscal year 1977 and does not violate that budget target.
What my amendment provides is that there will be a $100 tax credit per student beginning in June, 1977, and going up to $250 by 1980.
In my opinion, it makes no sense that this Nation can spend billions of dollars in countercyclical funds to bail out cities, billions of dollars for foreign assistance, billions of dollars for Government travel, but it cannot commit $1 to help the children of middle America attend college.
It is readily admitted that the fastest rising cost is in education. It seems to me it is about time we give recognition to middle working Americans and help them send their children to college.
If we favor providing a tax credit, I then urge we vote "No" on the Muskie motion.
I yield back the remainder of my time.
Mr. MUSKIE. Mr. President, the Senator from Delaware did not extensively discuss the merits, but one point I must emphasize.
The Senator was a member of the Government Operations Committee which wrote the Budget Reform Act. His argument this afternoon is because this has no impact in fiscal 1977, we ought not worry about it.
The Senator knows that one of the most difficult challenges facing this budget process is the uncontrollable nature of permanent authorizations of indefinite commitments made in 1 budget year casually, through the foot-in-the-door technique, that rise up to impose heavy burdens on the budget down here.
Here we are talking about almost $12 billion 5 years after the end of the fiscal year 1977, and the Senator says that is of no consequence, no consequence from a budgetary point of view.
Mr. President, we must begin to look at 5-year consequences which the Budget Reform Act requires us to do, the Reform Act requires us to look at 5-year costs, and that is what this is, 5-year costs.
I ask the Senate to tell the chairman of the Senate Budget Committee and the members of the Budget Committee whether that means anything.
I ask for the yeas and nays on the motion.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. RIBICOFF. Mr. President, I commend the Senator from Delaware for his efforts on behalf of families who are struggling to meet the ever rising costs of educating their children and I am pleased to be a cosponsor of his amendment.
I first introduced similar legislation over 12 years ago. On three separate occasions the Senate has voted for a tuition tax credit. Unfortunately, the House of Representatives has failed to follow our lead.
The impact of rising education costs hits middle income families the hardest. Generally, their children are ineligible to receive financial aid provided by State and Federal governments. These programs are, correctly I believe, targeted at the lower income students who until recently have been denied access to higher education.
Senator ROTH's tax credit amendment will provide some assistance to these middle income taxpayers who are paying the heavy costs of educating their children. This is sound tax policy and public policy. We are investing in our country's future by allowing this tax credit, just as we invest in our future when we allow industry an investment tax credit.
It provides, once fully phased in, a $250 tax credit for each eligible full time student in a vocational education institution as well as in an institution of higher learning. Because it applies to educational expenses incurred after June 30, 1977, it will have no revenue impact in fiscal year 1977. It will cost tax revenues in future years — $467 million in fiscal year 1978; $1.1 billion in fiscal year 1981. But this is a cost which I believe we should bear.
I urge the adoption of section 2306.
COLLEGE TUITION TAX CREDIT
Mr. MUSKIE. The Roth tuition tax credit would provide a credit against taxes paid equal to 100 percent of the first $100 in tuition and fees paid for higher education in the last 6 months of 1977, rising to $150 for these types of expenses paid in 1978, $200 in 1979, and $250 in 1980 and subsequent years. The person for whom the credit is claimed must be a full time student in college or vocational school.
The revenue loss resulting from enactment of this provision will be in millions of dollars:
Fiscal year 1977 0
Fiscal year 1978 467
Fiscal year 1979 711
Fiscal year 1980 926
Fiscal year 1981 1,103
This is a 5-year total of $3.2 billion.
First. The credit is likely to be largely or entirely reflected in increased tuition costs. Educational institutions, knowing this gift is being provided to virtually all their students, are likely to increase their tuition costs. When this occurs, no benefits at all will accrue to the taxpayers from enactment of this provision.
Second. Many students attend land grant colleges whose tuitions are extremely low as a result of direct subsidization. These persons would receive the full benefits of the credit, even though their college costs are already heavily subsidized.
Third. On the other hand, since the credit constitutes a relatively small fraction of full time private college costs, it will provide relatively little relief to parents whose children attend private colleges.
Fourth. The relative low level of benefits also indicates the strong likelihood that this level of benefits will be subject to future pressure to be raised substantially with concurrent large increases in the revenue loss associated with the provision.
Fifth. Because the credit is so broadly based, it will provide unnecessary relief to the very wealthy as well as those lower income taxpaying individuals whose dependents receive federally funded or other partial scholarships. Thus, the credit benefits are not efficiently targeted to the middle income class the proponents of the amendment seek to assist.
Sixth. The tuition credit was not the subject of Finance Committee or any other recent congressional hearings. The likely effects of the credit, including all the foregoing problems, have not been closely analyzed.
Seventh. In order to avoid any revenue impact on the fiscal year 1977 budget, this massive credit was formulated to take effect July 1, 1977, almost a year from now. Implementation of this costly credit easily could be fully considered before that time.
Eighth. The pending amendment to enact the credit now should be tabled.